Desal plant deal to bring down water bills, says Vic govt

Melbourne residents have received some rare good news when it comes to their water bills, with the Victorian Government promising they will come down. The government says this is due to its refinancing agreement with the consonsortium in charge of the state's controversial Desalination Plant.

Transcript

icon-plusicon-minus

ELEANOR HALL: Melbourne residents have received some rare good news when it comes to their water bills, with the Victorian Government promising they'll come down.

The Government says this is due its refinancing agreement with the consortium in charge of the state's controversial desalination plant.

In Melbourne, Kesha West reports.

KESHA WEST: Earlier this year Melbourne residents were hit with the bad news that water bills would be going up by at least $160.

Today some good news.

The Victorian Government announced that following an early refinancing deal on the heavily criticised Wonthaggi desalination plant, water users will get some money back in their pockets, although just how much won't be known for some months.

PETER WALSH: Aquasure refinanced their bank debt yesterday. They'll now, over the next two to three months, be putting in place the hedges for the future. Once that is known, we will come back and we'll inform Melbourne water customers and the people of Victoria as to the quantum of those savings and what they can expect to have off their water bills.

KESHA WEST: Water Minister Peter Walsh says the original deal for the desalination plant project, which was struck under the former Brumby Labour government, was expensive because it was made at the height of the global financial crisis.

Under the contract, Aquasure, the consortium in charge of the project, wasn't scheduled to refinance its $3.7 billion bank debt until next September.

The Water Minister says today's agreement also resolves more than a billion dollars in outstanding legal claims.

PETER WALSH: From a Coalition point of view we believe there should have been a small desalination plant as a supply of last resort for Melbourne. Not the huge plant that is down at Wonthaggi. It is too big, it is too expensive and it is 80 kilometres away from the nearest reservoir. So it is very expensive to pump that water back to Melbourne as well.

KESHA WEST: But opposition water spokesman John Lenders says the Napthine Government is just fixing its own mistakes.

JOHN LENDERS: The Victorian Government demonised this for three years. As a consequence of their actions, by their own admission, the cost of refinancing was higher. They've finally settled with the consortia and the consequence of that is, as they're no longer demonising it, the cost of finance is less and the cost to water consumers will come down.

KESHA WEST: Despite becoming operational in December last year, the multi-billion dollar Wonthaggi Desalination Plant has been in shutdown mode ever since.

With Melbourne's water levels at close to 80 per cent, the Victorian Government says it has no need to order any water.

Water Minister, Peter Walsh.

PETER WALSH: Who knows what may happen with the weather in the future. But with Melbourne water storage is again at nearly 80 per cent, we don't anticipate any need for a desalination plant in the foreseeable future.

KESHA WEST: But even without ordering any water, the cost to Victorian taxpayers is almost $2 million a day.

Victoria's opposition water spokesman John Lenders has defended the decision to build the Victorian desalination plant and guarantees it will be worth the cost to Melbourne's residents.

JOHN LENDERS: Melbourne is a city of four million people that was facing running out of water. It is still growing at 70,000 people a year. And this plant will be used.